The Chinese dairy industry is expected to go from 127 producers to 50 in five years through mergers and acquisitions, an industry insider said.

A draft to foster consolidation among infant formula dairy producers will be released later this month, said Song Liang, a dairy analyst from the Distribution Productivity Promotion Center.

The hope is to cultivate three to five large dairy producers, each with revenue exceeding 5 billion yuan ($819 million) in five years, Song said.